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Poland Monetary Policy January 2019

Poland: Interest rates on hold in January

As widely expected by market analysts, the National Bank of Poland (NBP) kept the reference rate unchanged at a record-low 1.50% at its 8–9 January monetary policy meeting. In addition, policymakers held the Lombard rate unchanged at 2.50%, the deposit rate at 0.50% and the rediscount rate at 1.75%. It has been more than three years since the NBP last moved the reference rate.

The announcement contained few surprises in light of policymakers’ recent insistence that rates would be left unchanged for some time, and low inflation (December 2018: 1.1%) continued to leave plenty of room for loose monetary policy. Forward guidance was kept largely intact, although policymakers noted that planned electricity tariffs could play on inflation more moderately than initially forecast. Meanwhile, any tightening by the European Central Bank (ECB)—which has committed to keeping rates low until at least late summer—could eventually prompt a response from Polish policymakers in an effort to mitigate the spread. As it stands, the NBP is likely to hold off on any moves for much of the year, at least, with FocusEconomics analysts currently split over whether to expect a first rate hike in the fourth quarter.

The next monetary policy meeting is scheduled for 5–6 February.

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